06 December 2013

Day 253: Living Income Guaranteed and Means Testing

Q: What information will be gathered to determine whether a person can receive a Living Income Guaranteed?

A: This question pertains to another question, which is: who will receive a Living Income?

The purpose of LIG in its most basic form is to provide a Living Income to those individuals who are unemployed or retired. Similarly to how the system works in most countries today – if you are unemployed and want unemployment benefits you require to register yourself as unemployed. Therefore, those who are registered as unemployed will receive a LIG. Those who retire and wish ‘retirement benefits’ would also make it known that they are retiring – hence with LIG – those registered as retired will receive a Living Income.

If within a country it is seen that it is viable to extend LIG to a wider range of recipients, additional criteria can be specified, for instance: anyone who is a student, or even every child (where the funds would first be available to the parents and only at a certain age become available to the child) in order to replace child support grants. Within such a system, additional information will have to be available – and thus, a greater degree of information integration should be in place. In some countries information integration is already quite extensive and if the resources are available, it would be a viable option. Other countries will first require to grow their economy and information infrastructure in order to expand LIG to a wider range of recipients.

Another way of expanding LIG is to tailor the Living Income to individual needs. For instance, an unemployed person with a chronic medical condition that requires continuous treatment will have higher monthly expenses than a healthy unemployed person. Where possible, the Living Income received by those two individuals could be different in order to provide each one with a more equal living standard. Such individual tailoring will require even more information access as it requires a detailed overview of every person’s expenses. Whether such expansion of LIG takes place will depend on the will of the people: a more equitable distribution of LIG is possible, but it would require individuals to allow a greater degree of information transparency. In many countries the tax return system is already so detailed that such information sharing would not be seen as an issue. Of course – in order to not make LIG too expensive, it would again require a certain level of automatization and integration of information, interlinking the information that is available by various institutions through for instance an electronic identity card, a card with a chip that can be linked to bank accounts, etc. This would allow the LIG allocation system to run the relevant calculations and equations according to the information attached to each person’s ID. Instead of going through the tiring and costly process of completing forms, each one would for instance have an ID card reader at home, place the ID card into it and upload the information to the LIG allocation system. Again, where such technology is not yet being deployed, an online system that ties all the information of an individual together by ID number can be used.

One must remember that information sharing is generally resisted by individuals when it comes to income tax collection. The tendency exists to hide information in order to not be charged a higher tax rate. With LIG, we suggest no personal income tax be charged and information sharing would be done from the perspective of receiving benefits in the form of Living Income. As such, we don’t foresee great resistance towards this point. Also to remember that eligible citizens would have a RIGHT to a Living Income but not an obligation to claim this right. Hence, if a person declines the right to a Living Income, one would not share one’s information and this person will not be taken into account by the LIG allocation system.

Recipients of LIG are not required to show that they are actively looking for employment and there is no limit to the period of time that one is supported by LIG.

The question also involves a second question: How can it be verified that a person truly deserves a Living Income?

What would happen in a scenario where a person registers as unemployed in order to claim a Living Income when the person is in fact still employed and receiving an income at least double the Living Income? This pertains to information integrity and would be the responsibility of the institution that registers a person as unemployed. Measures can be taken to contact the previous employer in order to verify the person is indeed no longer employed and bank account transactions can be monitored. Another scenario is where a person is registered as unemployed and works ‘under the table’, where the combined income of LIG and the wage received enable a person to live a luxurious lifestyle. Such points will only effectively be eradicated once money is entirely digitized and no transactions can take place without there being a record of it in the system – which is a point that any country that implements LIG should work towards in order to minimize abuse of the system. One must remember however that employment in informal commerce is often motivated by the need to survive. With LIG, such motivations would fall away as one can live a dignified life through receiving a Living Income.

For more information on the Living Income Guaranteed Proposal - please read this Document and visit http://livingincome.me.


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